Viacom, Inc. (NASDAQ: VIAB) left investors more anxious after the media company cut its dividend and fourth quarter earnings guidance, and announced the exit of interim CEO Tom Dooley.

The company slashed its quarterly dividend in half, from $0.40 to $0.20, which will save about $80 million per quarter. The dividend cut was expected as the previous yield of 4.3 percent was approximately double that of its closest peer.

Management Changes

Viacom also announced that Tom Dooley, interim president and CEO, will be resigning effective November 15, leaving Viacom to find another successor within the next seven weeks. The market was expecting Viacom to retain Dooley on a full-time basis.

"Another management change at a delicate time for Viacom means someone experienced will need to be found quickly to take the reins," Macquarie analyst Tim Nollen wrote in a note.

"We think potential candidates mentioned in the press such as Jeffrey Katzenberg and Rob Marcus could bring outside experience and views in the cable networks and studio businesses but we don't see an obvious choice and the timeframe is very short," Nollen continued.

Estimates And A Look Ahead

In addition, the company announced a debt raise in the near future to fund new content investment. Macquarie said the move will raise Viacom's net debt/EBITDA ratio from the current (and relatively high) 3.8x.

Nollen noted that Viacom should renew its focus on content development for survival, while its networks such as Nickelodeon, MTV, VH1, BET and Comedy Central need scripted content.

Since Viacom is not selling Paramount stake, Nollen said the studio should create franchise films that can be marketed globally, particularly in China.

Nollen, who has a Neutral rating on the shares, also suggested Viacom should consider an OTT service and shutting down its less penetrated networks.

"A competitively priced OTT service bundling cable content and the Paramount library could prove attractive over time but there could be a lot more disruption to the existing business to get there," Nollen highlighted.

The analyst cut his F2016 EPS view to $3.59 from $3.88 on both the impairment charge and cited severance costs. The analyst also reduced his target price to $35 from $44.

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